The IT systems at the heart of a £1.6bn EU subsidy scheme for English farmers are "cumbersome, overly complex and continue to soak up large amounts of money", according to a Whitehall watchdog.

The systems, known as Rita and Oregon, are used by Rural Payments Agency (RPA) to administer the Single Payment Scheme (SPS), which distributes subsidies to farmers.

In a report published today, parliamentary spending watchdog the Public Accounts Committee said much of the software and hardware used in the systems is no longer covered by technical support, which "increases the risk of system failure".

"The two main systems supporting the scheme, Rita and Oregon, have been heavily customised such that ongoing maintenance, repair and upgrades are likely to be expensive and challenging," the report said.

The PAC report added that the RPA should investigate whether it would be better off scrapping and replacing the systems, despite millions of pounds being spent on them already.

"The agency has spent £350m on a cumbersome IT system that can only be supported at huge cost and which is increasingly at risk of becoming obsolete," it said.

"The department [RPA's parent organisation Defra] should prepare a business case to establish whether it would be better to invest in a new IT system instead," the report added.

Information held on the two systems "remains riddled with errors", according to the PAC.

The difficulties of dealing with the "inaccurate data" held on the agency's systems has increased the cost of processing subsidy claims, with the RPA spending £1,743 on average on handling each claim - six times the amount spent per claim in Scotland.

The flawed data has also contributed to farmers being paid too much for subsidy claims. The report estimated that the RPA has overpaid farmers by between £55m and £90m and said that only £25m of this overpayment has been recovered to date.

By March 2009 the RPA had paid subsidies to farmers for more than 96 per cent of claims made under the SPS during 2008, meeting its EC target.

A Defra spokeswoman said in a statement: "The RPA has delivered substantial improvements in the timetable for SPS payments to farmers and ensured the agency's formal payment targets have been met."

The spokesperson added that Defra acknowledged that further work is needed to improve the RPA's performance and added that the PAC report's recommendations would inform a review of the RPA to take place in 2013.

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